Investment advice

[Johnnie]

[Johnnie]

Looks like you can't buy more than 5 shares at a time through Robin Hood.

And CNBC doxxed DeepFuckingValue. That's fucked up.

[Steve of phpBB]

This is the point I haven't heard anyone say. If the the Redditor guys "hurt the Hedge Fund Bros," doesn't that wipe out people's retirement funds, university endowments and a lot of other really good and necessary things and ultimately destroy our entire system?

As far as the hedge funds themselves, do we know whether retirement funds or endowments are involved with those very much? Institutional trustees are usually required to invest trust funds in certain kinds of assets and assets with a certain rating. (I should probably know this, since I'm one of the 401k trustees for my firm.)

The domino effects of hedge fund failures would be a different story though. They would fuck things up badly.

That's one of the problems with doing arson - sometimes you can't confine the effects to the thing you're trying to burn down.

[sancarlos]

I kind of understand that. But, also, I don't remotely understand that.

(the johnnie reddit thing)

I understand it spoiled Snowpiercer for me!

Also, I suspect that when these calls come due, the market/your broker/whomever comes after ANYTHING you have to cover your potential losses, which would have meant the intermeshed hedge fund network that likely everyone who owns a fund, or has pensions that own a fund, etc. would have been liquidated and the entire house of cards would have gone poof.

This is the point I haven't heard anyone say. If the the Redditor guys "hurt the Hedge Fund Bros," doesn't that wipe out people's retirement funds, university endowments and a lot of other really good and necessary things and ultimately destroy our entire system?

That is a problem, but the systematic problem is that these hedge funds were going too deep into the shorts. If people were not so tied into the stock market for retirement, endowments and such, this most likely never would have happened. But the hedge funds were to not only trying to make a shit ton of money for themselves, but they are pushed by those that invest in them also. The need to get the quickest and biggest return is the root of the issue.

I was always told that the market should be a slow play. But too many people just want that instant gratification.

Hedge funds didn’t just recently go “too deep” into short selling. It’s always been a foundational element of the definition of what makes a money manager a “hedge fund”. As in “hedging” against long bets on stocks by shorting other ones.

[mister d]

That's one of the problems with doing arson - sometimes you can't confine the effects to the thing you're trying to burn down.

Isn't the very simple answer that you bail out the non-private investors like universities and pension plans rather than the fund itself?

[duff]

Hedge funds didn’t just recently go “too deep” into short selling. It’s always been a foundational element of the definition of what makes a money manager a “hedge fund”. As in “hedging” against long bets on stocks by shorting other ones.

And there is nothing wrong with hedging, but it was the constant need to hedge and then going in over 100% on the shorts. Not just on GME but others as well. The hubris of these hedge funds that no group of retail investors would be able to overturn their turnip cart. As we have seen, no other hedge funds would have been willing to disrupt Merlin from over shorting. Why, because they all work together to manipulate the market. And god forbid that retail investors would ever be smart enough or willing to hold on their shares.

[Steve of phpBB]

That's one of the problems with doing arson - sometimes you can't confine the effects to the thing you're trying to burn down.

Isn't the very simple answer that you bail out the non-private investors like universities and pension plans rather than the fund itself?

I don't think that's very simple. The arson problem I was referring to isn't the failure of the hedge funds themselves, but the domino effects of hedge fund failures on other institutions and traders who either have funds with those hedge funds or who are owed money by those hedge funds. And the domino effects on our entire economy when credit dries up to handle those first domino effects.

[sancarlos]

Hedge funds didn’t just recently go “too deep” into short selling. It’s always been a foundational element of the definition of what makes a money manager a “hedge fund”. As in “hedging” against long bets on stocks by shorting other ones.

And there is nothing wrong with hedging, but it was the constant need to hedge and then going in over 100% on the shorts. Not just on GME but others as well. The hubris of these hedge funds that no group of retail investors would be able to overturn their turnip cart. As we have seen, no other hedge funds would have been willing to disrupt Merlin from over shorting. Why, because they all work together to manipulate the market. And god forbid that retail investors would ever be smart enough or willing to hold on their shares.

I agree with you. I was just noting that nothing the hedges are doing is new here.

[sancarlos]

That's one of the problems with doing arson - sometimes you can't confine the effects to the thing you're trying to burn down.

Isn't the very simple answer that you bail out the non-private investors like universities and pension plans rather than the fund itself?

I don't think that's very simple. The arson problem I was referring to isn't the failure of the hedge funds themselves, but the domino effects of hedge fund failures on other institutions and traders who either have funds with those hedge funds or who are owed money by those hedge funds. And the domino effects on our entire economy when credit dries up to handle those first domino effects.

Remember that probably only a couple/few hedge funds getting killed lately. Others shorted these hot stocks at their recent peaks and are doing great now.

[mister d]

That's one of the problems with doing arson - sometimes you can't confine the effects to the thing you're trying to burn down.

Isn't the very simple answer that you bail out the non-private investors like universities and pension plans rather than the fund itself?

I don't think that's very simple. The arson problem I was referring to isn't the failure of the hedge funds themselves, but the domino effects of hedge fund failures on other institutions and traders who either have funds with those hedge funds or who are owed money by those hedge funds. And the domino effects on our entire economy when credit dries up to handle those first domino effects.

But if its wealth management shit, isn't that just the stated risk?

[Steve of phpBB]

But if its wealth management shit, isn't that just the stated risk?

Yes, but just because something is a stated risk doesn't mean it's okay to bring it about.

When I bought my house, I was aware that there was a risk that it would burn down. That doesn't mean that it's okay for someone to start a fire that burns it down, nor does it mean that my house burning down would cause me a big problem.

And yeah, I can buy insurance for my house, but I can't buy insurance for my kids' college fund.

[mister d]

I trust you bought insurance. Better analogy is you know there's a chance you house's valuation could plummet at which point you'd be stuck.

[govmentchedda]

Who's setting the fire in your analogy?

[mister d]

Probably Bernie Bros.

[Steve of phpBB]

Who's setting the fire in your analogy?

The Redditors. They're burning down the house of the people down the street who are real selfish assholes. But it's windy and dry and all our houses are close together and fires tend to spread.

[duff]

Who's setting the fire in your analogy?

The Redditors. They're burning down the house of the people down the street who are real selfish assholes. But it's windy and dry and all our houses are close together and fires tend to spread.

Don't build your house out of paper and match sticks.

[Gunpowder]

Let's just let them get away with everything so that they can tank the market on their own time.

[Steve of phpBB]

Who's setting the fire in your analogy?

The Redditors. They're burning down the house of the people down the street who are real selfish assholes. But it's windy and dry and all our houses are close together and fires tend to spread.

Don't build your house out of paper and match sticks.

Okay, but your house is made of the same stuff.

[duff]

Who's setting the fire in your analogy?

The Redditors. They're burning down the house of the people down the street who are real selfish assholes. But it's windy and dry and all our houses are close together and fires tend to spread.

Don't build your house out of paper and match sticks.

Okay, but your house is made of the same stuff.

My house is not built of the same material.

[Steve of phpBB]

Who's setting the fire in your analogy?

The Redditors. They're burning down the house of the people down the street who are real selfish assholes. But it's windy and dry and all our houses are close together and fires tend to spread.

Don't build your house out of paper and match sticks.

Okay, but your house is made of the same stuff.

My house is not built of the same material.

You don't have any money in any kind of retirement account involving stocks, and you also don't work at a job that would be affected by a 2008-style collapse of the financial system?

[Megawatt]

I kind of understand that. But, also, I don't remotely understand that.

(the johnnie reddit thing)

I understand it spoiled Snowpiercer for me!

Also, I suspect that when these calls come due, the market/your broker/whomever comes after ANYTHING you have to cover your potential losses, which would have meant the intermeshed hedge fund network that likely everyone who owns a fund, or has pensions that own a fund, etc. would have been liquidated and the entire house of cards would have gone poof.

This is the point I haven't heard anyone say. If the the Redditor guys "hurt the Hedge Fund Bros," doesn't that wipe out people's retirement funds, university endowments and a lot of other really good and necessary things and ultimately destroy our entire system?

That is a problem, but the systematic problem is that these hedge funds were going too deep into the shorts. If people were not so tied into the stock market for retirement, endowments and such, this most likely never would have happened. But the hedge funds were to not only trying to make a shit ton of money for themselves, but they are pushed by those that invest in them also. The need to get the quickest and biggest return is the root of the issue.

I was always told that the market should be a slow play. But too many people just want that instant gratification.

Hedge funds didn’t just recently go “too deep” into short selling. It’s always been a foundational element of the definition of what makes a money manager a “hedge fund”. As in “hedging” against long bets on stocks by shorting other ones.

That’s an oversimplification, the “hedging” these funds do are not only done with short selling, buying put options remains a viable strategy

[sancarlos]

There are lots of ways to hedge long positions. I acknowledge you are right there. The most common hedging strategy (at least among the hedge fund managers I’ve known) is to pick two companies in the same or related industries and go long on one and short on the other.

[Gunpowder]

Who's setting the fire in your analogy?

The Redditors. They're burning down the house of the people down the street who are real selfish assholes. But it's windy and dry and all our houses are close together and fires tend to spread.

Don't build your house out of paper and match sticks.

Okay, but your house is made of the same stuff.

My house is not built of the same material.

You don't have any money in any kind of retirement account involving stocks, and you also don't work at a job that would be affected by a 2008-style collapse of the financial system?

That was the one where multiple large banks gobbled up insane risk, packaged it together and lied about it before selling it off to other banks and crashed the entire system, right? That's the one that's going to be identical to a hedge fund or two taking a maybe $1 billion loss on one stock?

[Gunpowder]

Hedge funds are trying to beat the market and use risky tactics to do it, no matter what their name is. They aren't there to "hedge".

[Gunpowder]

Not wanting to upset the apple cart is the same reason we won't pull out of the Middle East, ever. Why even have rules if we're going to let big investors manipulate markets and essentially just suck money out of the economy? People act like your local teachers pension is YOLO-ing their money in call options or something.

[Steve of phpBB]

The failure of a couple hedge funds is fine as long as theres a way to stop any spread if it looks likely.

And hell, I’d love to see stricter rules and more widespread and tougher enforcement.

[mister d]

Hedge funds are trying to beat the market and use risky tactics to do it, no matter what their name is. They aren't there to "hedge".

I know its not being a good american, but I'd love to them to simply not be legal. There's no value contributed, just upward reallocation of money.

[Gunpowder]

The failure of a couple hedge funds is fine as long as theres a way to stop any spread if it looks likely.

And hell, I’d love to see stricter rules and more widespread and tougher enforcement.

There's only one way that's going to happen and that's for enough people to finally get fed up with it. It sure as hell ain't the status quo. In fact, I think you can argue that crushing a few hedge funds that engaged in insanely risky behavior now may prevent a greater collapse 5 years from now.

[Gunpowder]

Hedge funds are trying to beat the market and use risky tactics to do it, no matter what their name is. They aren't there to "hedge".

I know its not being a good american, but I'd love to them to simply not be legal. There's no value contributed, just upward reallocation of money.

I think it is being a good American, honestly. There's a fairness issue in all of this and also the dudes that invented America weren't exactly the most keen on large concentrations of wealth.

[Johnnie]

This is awesome:

Signs of the times: GameStop investors mock humbled hedge funds with billboards across the US saluting their stock gains - as billionaire Ray Dalio says 'the little guy' has Wall Street on the run

[Steve of phpBB]

Hedge funds are trying to beat the market and use risky tactics to do it, no matter what their name is. They aren't there to "hedge".

I know its not being a good american, but I'd love to them to simply not be legal. There's no value contributed, just upward reallocation of money.

I think it is being a good American, honestly. There's a fairness issue in all of this and also the dudes that invented America weren't exactly the most keen on large concentrations of wealth.

I’d love for so much of that industry to be illegal.

Gambling was illegal under the common law, and this included speculation in stocks. Then exceptions were made, etc etc, and here we are. If there was a way to ratchet some of this back, let’s go that.

GPJ, do you think a tax on stock transactions would help?

[Gunpowder]

Hedge funds are trying to beat the market and use risky tactics to do it, no matter what their name is. They aren't there to "hedge".

I know its not being a good american, but I'd love to them to simply not be legal. There's no value contributed, just upward reallocation of money.

I think it is being a good American, honestly. There's a fairness issue in all of this and also the dudes that invented America weren't exactly the most keen on large concentrations of wealth.

I’d love for so much of that industry to be illegal.

Gambling was illegal under the common law, and this included speculation in stocks. Then exceptions were made, etc etc, and here we are. If there was a way to ratchet some of this back, let’s go that.

GPJ, do you think a tax on stock transactions would help?

It might after a certain amount. Like firms with algorithms that make millions of trades a day? I don't think that is "investing" in the way the stock market was originally intended to function. But just adding a blanket fee to each transaction? That probably hurts me more than it hurts Melvin Capital and other big firms that trade in huge amounts while I'm out here buying like 1 YOLO OTM call.

[sancarlos]

I don't know about that. If the program traders had to pay a fee for every one of their hundred of daily trades, it might make their business model less viable.

[Steve of phpBB]

I don't know about that. If the program traders had to pay a fee for every one of their hundred of daily trades, it might make their business model less viable.

As far as I know, that’s the idea. The tax they’re talking about is like a few pennies per transaction or something.

[Gunpowder]

And they can go fuck themselves with this thought that it's all stimulus checks. We've been starting to mess around in the markets for a few years now and it has a lot more to do with an entire generation not knowing what a 401K or a pension is than it does with one ineffective check.

[Gunpowder]

I don't know about that. If the program traders had to pay a fee for every one of their hundred of daily trades, it might make their business model less viable.

As far as I know, that’s the idea. The tax they’re talking about is like a few pennies per transaction or something.

How many pennies are you going to charge a $20 billion fund before it starts to impact them? That's barely a rounding error. There are definitely algo firms out there who would be hurt but your regular money movers? I doubt it would mean much. I have to pay a commission to TD with every trade I make and it never influences anything that I do.

[Steve of phpBB]

I don't know about that. If the program traders had to pay a fee for every one of their hundred of daily trades, it might make their business model less viable.

As far as I know, that’s the idea. The tax they’re talking about is like a few pennies per transaction or something.

Well, that’s why I’m asking what you think about it.

How many pennies are you going to charge a $20 billion fund before it starts to impact them? That's barely a rounding error. There are definitely algo firms out there who would be hurt but your regular money movers? I doubt it would mean much. I have to pay a commission to TD with every trade I make and it never influences anything that I do.

[Gunpowder]

I know - and I hate the microtrader bots. Those fuckers drove the collapse last March and they'll absolutely do it again. I just don't think that most big funds are doing enough that a fee would really affect them.

[Johnnie]

Seems like the fun is over. (I'm asleep during the entirety of the market being open in this timezone, so my bad if I'm late.)

Robin Hood limited trading to a point that you could only buy a share a day these past couple days. People tried their best to open their accounts elsewhere (Fidelity, for example), but they simply couldn't drive the prices higher.

Looks like that and a coordinated approach during after hours trading put the big business types back in the driver's seat.

Despite this, Reddit user who helped inspire GameStop mania says he lost $13 million on Tuesday, but is still holding on.

And Robinhood CEO expected to testify before Maxine Waters' panel on GameStop on 18 February.

GME closed at $90 (down 60%, or $135) today and is at just over $85 in after hours trading.

The Wall Street Bets crowd (which has more than doubled its readership and is probably the target of lots of bots) is acting like this is just a road block.

Mark Cuban did an AMA there yesterday and is still on board defending Reddit everywhere he can. And they've started shitting on Dave Portnoy because of his "paper hands." (He sold off his stocks.)

[Johnnie]

So there I was 6 months early to the weed stocks breakout party with my paper hands....